NI rates hiked - how much more will workers pay?
Earlier today (7 September) Boris Johnson announced that NI and dividend tax rates will be hiked to help fund social care, pay for coronavirus support measures and clear the NHS backlog. Who will be affected and by how much?
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Deadline to pay Class 1B NI
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HMRC speeds up National Insurance refunds
HMRC has confirmed that it is using a new automated process to speed up National Insurance refunds. Where its records suggest that someone may have overpaid, HMRC will write to them asking them to check their employment and contribution details before any refund is processed. Could you be due money back?
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Should you voluntarily payroll benefits in kind?
The window to sign up to voluntarily payroll non-mandatory benefits in kind for 2027/28 will open in November. Is it worth volunteering to pay HMRC earlier than required or should you wait until it becomes mandatory in 2028/29?
Firstly, NI rates will increase by 1.25% from April 2022. This will apply to both primary and secondary Class 1 contributions, which will increase to 13.25% and 3.25% for earnings up to, and above, the upper earnings limit respectively. Class 4 rates will also increase to 10.25% and 3.25%. The additional 1.25% will be carved out as a separate levy from April 2023 - essentially it will be a new tax.
To illustrate what this will mean for employees, the following table is a useful reference, assuming the current NI thresholds apply:
|
Salary |
Current NI bill |
Expected increased NI bill |
Change |
|
£15,000.00 |
£651.84 |
£719.74 |
£67.90 |
|
£25,000.00 |
£1,851.84 |
£2,044.74 |
£192.90 |
|
£35,000.00 |
£3,051.84 |
£3,369.74 |
£317.90 |
|
£45,000.00 |
£4,251.84 |
£4,694.74 |
£442.90 |
|
£55,000.00 |
£4,951.84 |
£5,519.74 |
£567.90 |
Secondly, the dividend tax rates will also increase by 1.25%, i.e. to 8.75%, 33.75% and 39.35% for basic, higher and additional rate taxpayers respectively.





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